Line & Distribution Losses biggest threats to Circular Debt: WAPDA Report 2015-16

Water and Power Development Authority report for 2015-16 revealed that line and distribution losses and low recovery of bills have been one of the biggest threats for ballooning circular debt and made heavy dents to the exchequer

Time Frame for New Connection: While reviewing the data pertaining to the percentage of consumers who were not provided new connections in 2015-16 within the time frame as prescribed in PSDR 2005, it was observed that IESCO & HESCO are faring better and have shown zero pendency of new connections. Further, PESCO, SEPCO and K-Electric have also provided more than 95% of applied connections in 2015-16. However, QESCO’s performance is worst in this regard.

The WAPDA report found out some details following submission of the data by DISCOs & K-Electric for the year 2015-16, following major observations have been noted: T&D Losses & Recovery: It has been noted with serious concern that DISCOs and K-Electric contributed around Rs. 49 billion and Rs. 83 billion loss respectively to national exchequer in 2015-16 due to their inefficiency with respect to T&D losses and recovery targets.

The reported figures of T&D losses indicate that except IESCO, none of the DISCO could meet the regulator’s expectations. On the other hand, SEPCO has shown the worst performance among all DISCOs in this regard. As far as recovery is concerned, FESCO has achieved 100% target while IESCO, GEPCO, LESCO and MEPCO have also reported more than 99% recoveries. It is worth mentioning that QESCO has improved its recovery from 32.6 percent to 71.6 percent in 2015- 16 as compared to 2014-15.

NEPRA has serious reservations over the authenticity of data regarding load shedding being carried out by DISCOs & K-Electric in their service territories. The data provided by DISCOs & K-Electric shows that DISCOs & K-Electric shed the load from 1 to 4 hours daily which is far away from ground realities. Further, it is a matter of concern that DISCOs and K-Electric are not following the order of load shedding according to different categories of consumers as provided in PSDR 2005.

The report recorded that that national exchequer suffered a loss of more than 48 billion rupees in 2015-16 due to the inefficiency of distribution companies. Such losses are playing vital role in creation of circular debt. Above financial impact is calculated by considering the average notified rate of each DISCO minus average fuel price adjustment for the year 2015-16.

The loss of revenue which was not recovered by the DISCOs and KE due to their poor management. The loss to the national exchequer accumulates to more than 83 billion rupees. It is also observed that FESCO is the only DISCO which did not incur loss under this head during the year 2015-16.